Tex. Cable Suit’s Preemption Claims May Have Merit, Lawyers Say
The Tex. cable industry’s lawsuit against a video franchise law raises legitimate issues, especially in allegations of preemption of federal authority, said lawyers who had studied it. The Tex. Cable & Telecom Assn. (TCTA) sued Thurs. to halt implementation of a bill signed the previous day by Gov. Rick Perry (R) (CD Sept 8 p10, July 18 Special Report).
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TCTA listed Perry and state public utility commissioners as defendants, saying the law discriminates against cable operators by removing the federally granted right of municipalities to grant franchises. The suit said cable operators must get franchises to sell video services under federal law. But Bells can immediately seek statewide certification, TCTA Vp-Govt. Relations Kathy Grant said.
The suit’s main argument of preemption raises important antidiscrimination issues, said Womble Carlyle telecom attorney Michael Hazzard. The Tex. law has an antiredlining provision but doesn’t require full buildout wherever video service is sold. “I think there is a pretty good argument that you could make that Congress occupied the field when it took up the authority in the Cable Act” of 1984, Hazzard said: “The state law allows some type of discrimination based on the type of provider you are. The federal statue does not allow for discrimination in awarding franchises.” One disparity in the Tex. law is that cable operators can’t immediately apply for statewide certification, industry officials have said.
“Verizon and SBC may not implement their video plans until they have obtained franchises,” said TCTA’s filing in U.S. Dist. Court, Austin, seeking an injunction. “Verizon has acknowledged as much, and has obtained franchises in numerous municipalities.” SBC “has sometimes asserted that its video service would not quality as a ‘cable service’… but that argument is plainly wrong and apparently provides only cold comfort to SBC itself,” the complaint said. SBC and Verizon officials had no comment on the legal merits of the lawsuit, though the companies have applauded Senate Bill 5. Officials with Perry and Sen. Troy Fraser (R), who wrote the video bill, didn’t comment.
TCTA’s suit, while raising legitimate questions, isn’t assured of success, analysts said. “The cable brief raises some legitimate questions about potential conflicts between federal law and the Tex. statute,” said Stanford Washington Research Group analyst Paul Gallant, a former FCC legal adviser: “But this is not a slam dunk. The Texas law was written with the full expectation that it would be challenged on these grounds.” Other analysts were more cautious in their assessment. “The cable association has a tough battle,” Regulatory Source Assoc. analyst Anna-Maria Kovacs wrote in a client note.